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February 8, 2010

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Investors on sidelines ahead of Spring Festival

By Pan Xiaoyi | February 8, 2010, Monday | Print Edition

THE Chinese mainland's stock market will be sluggish this week as investors are likely sit on the sidelines in the last trading week before it closes for the Spring Festival which begins on February 14, according to analysts.

The benchmark Shanghai Composite Index posted a weekly loss of 1.7 percent last week to end at 2,939.4 last Friday on fears that a global recovery may falter. The barometer has lost 10.7 percent so far this year, pushing the Shanghai bourse as the worst performing market worldwide, on concerns that the government may take tighter measures to curb asset bubbles and inflation.

"As there are too many uncertainties ahead of the Spring Festival, investors are reluctant to enter the market," said Yi Xiaobin, an analyst at Galaxy Securities Co.

Analysts said the uncertainties include liquidity pressure from new stock offerings and expectations that the government will tighten its monetary policy. Another cloud hanging over the market is sovereign debt problems in the eurozone countries.

According to Yi, investors' reluctance to trade "will make it hard to push up the key index."

"Investors are concerned over an interest rate rise around the Spring Festival," Liu Jingde, an analyst at Cinda Securities, said. "But the hike may depend on the economic data for January due out this week."

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